Hustvedt was born in Northfield, Minnesota. Her father Lloyd Hustvedt was a professor of Scandinavian literature, and her mother Ester Vegan emigrated from Norway at the age of thirty. She holds a B.A. in history from St. Olaf College and a Ph.D. in English from Columbia University; her thesis on Charles Dickens was entitled Figures of Dust: A Reading of Our Mutual Friend.

Like her husband, Paul Auster, Hustvedt employs a use of repetitive themes or symbols throughout her work. Most notably the use of certain types of voyeurism, often linking objects of the dead to characters who are relative strangers to the deceased characters (most notable in various facets in her novels The Blindfold and The Enchantment of Lily Dahl) and the exploration of identity. She has also written essays on art history and theory (see "Essay collections") and painting and painters often appear in her fiction, most notably, perhaps, in her novel, What I Loved.

She lives in Brooklyn, New York, with her husband and their daughter, singer and actress Sophie Auster.

Novels

• The Blindfold (1992)
• The Enchantment of Lily Dahl (1996)
• What I Loved (2003)
• The Sorrows of an American (2008)
• The Shaking Woman or A History of My Nerves (2010)

Poetry

• Reading to You (1983)

Essay collections

• Yonder (1998)
• Mysteries of the Rectangle: Essays on Painting (2005)
• A Plea for Eros (2005)